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• In June, netizens raised an outcry after seeing photographs posted online by Ms. Guo Mei Mei, 20, a supposed general manager of the Red Cross’ commercial arm, of her Maserati luxury car and Hermes designer bags. They believe she is the girlfriend of Mr. Wang Jun, who organizes fund-raising drives for the Red Cross. The National Audit Office has since issued a report listing five financial problems it uncovered at the Red Cross.

• Asia News Network reported that when tennis star Li Na wanted to donate half a million yuan (US$78,000) of her Roland Garros championship prize money in July, she decided not to do it through the Red Cross Society. After seeing China's largest charity recently embroiled in the Guo Mei Mei controversy over its management and alleged abuse of donations, she chose to donate the money directly to a home for the elderly in her hometown of Wuhan.

• The China-Africa Hope Project, which raises money to build schools in Africa, came under fire in August when a local newspaper found that it was a private enterprise and was deducting 10 per cent of donations for management fees. The charity is headed by 24-year-old Lu Xingyu, the daughter of a prominent businessman, Mr. Lu Junqing.

• The China Charity Federation was accused in August of issuing receipts for solar panels worth 15 million yuan (HK$18.3 million) to a solar panel company, even though the panels were still in the donor’s warehouse, according to mainland media. The federation received a handling fee of 50,000 yuan. Only large charity funds endorsed by the government can issue such receipts, which allow donors to enjoy tax deductions. Central China Television said the receipts for 15 million yuan would be able to save the donor 2 million yuan in tax. It said the amount was the result of negotiations with the donor - Suntech Silicon Solar Technology in Wuxi, Zhejiang - and that the federation usually charged a 3 per cent handling fee for cash donations.

• In September, a top representative from Henan Soong Ching Ling Foundation (HSCLF) told Caixin Newspaper that HSCLF siphoned off donor funds for real estate investment following local media reports alleging financial misconduct. This is also being investigated by the National Audit Office.

To cap this all off – donations to all charities in China fell by about ninety percent in the wake of the scandals!

The Nonprofit Quarterly reports on an article in the South China Morning Post (free registration required) that the China Soong Ching Ling Foundation has engaged in extensive commercial lending and facilitated substantial private real estate development efforts. Of perhaps greatest interest, the original article is quoted as asserting that this story about the third-largest charity in China follows "a slew of revelations in recent months of irregularities and murky deals involving big names in the sector, including the country's two biggest charities, the Red Cross Society of China and the China Charity Federation." No word yet on whether the equivalent of Senator Grassley has emerged within the Chinese government to address these issues.

The Tennessean reports that Jay Sekulow, legal advocate for religious freedom on behalf of evangelical Protestant groups, and his family and businesses have received more than $33 million over the past dozen or so years from two charities, the American Center for Law and Justice and Christian Advocates Serving Evangelism. The article details millions of dollars in total payments to the law firm co-owned by Sekulow, to Gary Sekulow (Jay Sekulow's brother), and to a private jet leasing company owned by Jay Sekulow and another private jet leasing company owned by Kim Sekulow (Jay Sekulow's sister-in-law), among others. The ACLJ has responded with a press release asserting that all of the financial relationships were reasonable and appropriate and noting that both charities were recently subject to an IRS audit that concluded no changes were required.

The Internal Revenue Service, IRS Chief Counsel, and Department of the Treasury have jointly issued the 2011-2012 Priority Guidance Plan. There is little if anything of surprise in the Exempt Organizations section, with all of the items listed representing guidance that was known to be in process or that was expected given recent legislation. Here is the complete list:

Final regulations under §§170, 507, 509, 6033 & 6043 to implement Form 990 revisions and to modify the public support test. Temporary regulations were published on September 9, 2008.

Guidance under §501(c)(29), as added by §1322 of the ACA, relating to tax exemption for certain qualified nonprofit health insurance issuers.

Regulations under §§501(r) and 6033 on additional requirements for charitable hospitals as added by §9007 of the ACA.

Notice under §§501(r) and 6033 on additional requirements for charitable hospitals as added by §9007 of the ACA. (PUBLISHED 07/25/11 in IRB 2011-30 as NOT. 2011-52 (RELEASED 07/07/11).

Final regulations under §§509 and 4943 regarding the new requirements for supporting organizations, as added by §1241 of the Pension Protection Act of 2006. Proposed regulations were published on September 24, 2009.

Additional guidance on §509(a)(3) supporting organizations.

Update to Revenue Procedure 92-94 on §§4942 and 4945.

Notice under §4943, as amended by §§1233 and 1243 of the Pension Protection Act of 2006, on excess business holdings rules.

Guidance under §4944 on program-related investments.

Regulations regarding the new excise taxes on donor advised funds and fund management under §4966 as added by §1231 of the Pension Protection Act of 2006.

Regulations under §6033 on group returns.

Final regulations under §7611 relating to church tax inquiries and examinations. Proposed regulations were published on August 5, 2009.

The Internal Revenue Service and Department of the Treasury issued final regulations relating to the annual Form 990. Little changed from the proposed and temporary regulations issued previously, the final regulations eliminate the "advance ruling" process that used to require section 501(c)(3) organizations seeking to avoid private foundation status based on public support to submit proof of that support after five taxable years of existence and to receive an IRS letter confirming that status at that time. Now newly formed organizations simply need to report their public support information on the Form 990 each year (assuming they are required to file it). They also clarify (in § 1.6033-2) that compensation paid to officers, directors, trustees, key employees, highly compensated employees, and independent contractors should be reported on a calendar year basis.

The law on nonprofit directors’ obligations is sparse and fragmented. Most of the discussion over the years is lore rather than law based on commentators’ suggestions for best practices. This article attempts a comprehensive and systematic analysis of the law relating to nonprofit directors’ obligations. On the one hand, there is a basis for suggesting that since nonprofits implicate public trust issues, nonprofit directors should be held to standards higher than those imposed on for-profit directors. On the other hand, in order to attract people to serve on nonprofit boards, states generally offer more insulation from director liability than is found in the for-profit world. How can this apparent contradict be reconciled? Perhaps the solution lies in recognizing that truly altruistic motivations for serving on nonprofit boards will result in directors having their own internal incentive to do the right thing and put in the time and effort necessary for effective nonprofit monitoring. To the extent that it is too much to expect the best from people, this article explores nonprofit directors’ responsibilities and how they relate to the law limiting directors’ accountabilit.